Leading telecom equipment manufacturer Huawei will invest $2 billion in India over the next four years as it seeks to aggressively market consumer devices and 4G long-term evolution (LTE) solutions while establishing a global research and network operations hub in the country.
“India is a long-term market, where patience is a must,” said Cai Liqun, chief executive officer of Huawei India. Though the company clocked revenues of $1.5 billion in FY12, an increase of 20 per cent, Huawei India has postponed some new investments citing the economic slowdown.
“We earned $1.2 billion from network solutions and management services and $300 million from devices, customer premises equipment and dongles in the last financial year,” he added.
Huawei is betting big on the roll out of 4G LTE services in India and is targeting “more than 50 per cent of the contracts” in this space, said Liqun. “We have deployed a large number of base stations in India on time division duplex (TDD) LTE. Our products are ready for shipping and we seek more devices that can support LTE,” said Ying Weimin, president of GSM, UMTS (universal mobile telecommunications system) and LTE network at Huawei.
While only a small part of Huawei India’s revenue is derived from its LTE business, the company has earmarked Europe and Asia Pacific as its top 2 regions for growth.
Huawei supplies dongles (devices to help consumers connect to the network) for Bharti Airtel’s 4G network in Bangalore. Highlighting competitive pricing as one of the company’s advantages, Weimin added, “We hope operators choose bundling of infrastructure and equipment as it is more resource efficient for us to manage equipment we manufacture.”
Liqun said, “Indian professionals are good in technical and communication skills. We want our India operations to support managed service operations globally.” Huawei India has set up a new $150 million R&D facility, for 2,500 engineers, in Bangalore that is to become operational from June 2013. The company is also setting up a global network operations centre (GNOC) in India that can “support 140 nodes (networks)”, in an effort to provide managed network services to its customers. These investments are part of Huawei’s plans to invest $2 billion in India over the next five years.
Huawei’s current market share in mobile phones and devices is three-four per cent. “In three-five years, we want to become one of the top 3-4 players in this space,” said Scott Sykes, vice-president, corporate media affairs at Huawei. Terming the opportunity in mobile phones as one of the biggest, the company is targeting sales of 60 million mobile phones globally this year. Huawei hopes that the “Ascend P1”, which was launched at the Mobile World Congress in Barcelona, will make waves in India and contribute substantially to the company’s target of deriving $9 billion in revenue from mobile devices.
Fears over security concerns, however, continue to dog Huawei globally. Australia had barred the company from participating in contracts for the national broadband network. The company, along with its rival ZTE, has been bidding aggressively for 4G networks in the US. The two Chinese companies are now being investigated by the US congress to determine if the contracts will give the “Chinese government an opportunity to hijack the nation’s infrastructure to conduct espionage”. To placate India’s security concerns, Huawei had placed the source code for its telecom equipment in an escrow account. “We are working with various national governments on their security concerns,” said Sykes.